"OVER-ENGINED"

Evening Post, Volume CVI, Issue 129, 28 November 1923, Page 5

"OVER-ENGINED"

BUSINESS IN NEW ZEALAND

HEAVY BORROWING CRITICISED

-"On the whole, 37ew Zealand can congratulate herself upon the progress made (luring last year," remarked the president of the New Zealand Employers' Federation, Mr. T. Shailer Weston; addressing the annual meeting cf that body this morning. Mr. Weston proceeded to review at length the principal events in the industrial life of the Dominion j within the past twelve months, and to offer some suggestions for the improvement of trade generally. Prices for primary products, he said, had . been good. Thoße farmers wbb were not hampered by past misfortunes had saved money, and those who had made mistakes short of the irretrievable had been able to hold their own once again, and in some cases make up in part the losses incurred by them in the previous two years. Given fair prices for the next two years, ninety per cent, of the agriculturists and pastoralists should again find themselves on a firm basis, and any individual who did not look for extravagant profits Should be content with his returns. The outlook for some of the secondary industries, however* was not so good. In some branches, notably engineering, there had been over-developmentj and expensive plant and machinery had been installed to manufacture articles for which there was not a sufficiently large local market. In other cases, such as the freezing works, there were too many competitors. In general business, also, one might, venture to say New Zealand was over-engined. Competition was a good thing, but too many firms meant an average turnover tc>o "limited as compared with overhead expenses, and hence it became an obstacle to the general reduction-of prices which would give relief to every one. Moreover, many large concerns had been heavily hit by the post-war slump.' Business profits were now too small to allow of replacement of lost capital and, consequently, before stability could be attained, reconstruction would have to be faced. The income tax returns were evidence that there must be in New Zealand a fair volume of safe and solid business. THE BORROWING TENDENCY. "At the same time," said Mr. Weston, "there is no use disguising the fact that this country has yet a long path to travel before all post-war problems of '■ reconstruction and readjustment are left behind. Although the Government has reduced its expenses of administration, there is the ever-present tendency towards renewed extravagance immediately the pressure of hard times lessens in the slightest degree. There is also a steady and astonishing growth in local bodies' borrowing. Government loans, although admitted for works more or less reproductive, continue to be heavy, arid taxation had not yet been reduced to a limit which shows a reserve available to increase the national revenue in the face of any sudden emergency. There is a real danger, if our Government is tenipted to take advantage of easy interest terms and borrow heavily for extensive new public works., that labour, which would be more safely employed in private undertakings, will be diverted to public works. The proportion of our population dependent upon the continue ance of these for a living will be increased. Works which are not an immediate necessity will be undertaken, and when the time comes, and inevitably it will come, when borrowing has to taper off, it will be more difficult to redistribute the .population iiving upon public works expenditure into natural and normal avenues of employment" LOWER PRICES FOR FARMERS. In the next few years the close competition between England,- the United States, Germany, and France would reduce the prices of manufactured article* materially. The reductions in English wages showed what England already had been forced' to undergo in order to sell her goods. Trade reports throughout the world Bhow a thorough-going effort,on the part of all rural communities to increase their production. The present high prices in dairy produce must inevitably mean bigger outputs. The best market for these was London. New Zealand farmers must therefore expect to meet greater competition, and hence lower prices. Extravagance at the present time, either by the Government, local bodies, or private individuals, was much to be deprecated. Any public work, unless a necessity and cer- ' tain to pay interest upon.capital in the hear future,, should be avoided. Railways had been built to give districts access to markets and shipping ports. No sooner were they built and running than the districts desired to borrow heavily in order to construct harbours. "They say this is the sole business of each locality—that the locality will have to repay the loan if the works are a failure," said the speaker. "This.'how. ever, is a fallacy. No one district can be prosperous or depressed without affecting the rest of the Dominion. The railways are now not paying interest upon their cost of construction. Why, therefore, build railways if you intend to rob them of their traffic by making expensive artificial harbours, or by permitting heavy motor traffic on adjoining roads without charging such traffic with the cost of the repairs it renders necessary to the road?"